Why Taiwan Semiconductor Manufacturing Co. Stock Jumped 26.4% in 2017

What happened

Shares of Taiwan Semiconductor Mfg. (NYSE: TSM) gained 26.4% in 2017, according to data from S&P Global Market Intelligence. The world's largest contract manufacturer of semiconductors followed up on a 28% return in 2016 with another solid effort, partly thanks to surging interest in cryptocurrency mining.

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So what

When TSMC reported 18% sequential sales growth in the third quarter, CFO Lora Ho pointed to cryptocurrency miners as a significant growth driver. Among more traditional client industries such as automotive computing and the Internet of Things, hyperspecialized processors for crypto mining have become so popular that TSMC might consider breaking these application-specific integrated circuit, or ASIC, order out into a new reportable segment soon. So far, these chips have been bundled into the general "computer" category, where sales increased by 46% in the third quarter.

Now what

Overall, TSMC expects high-performance computing needs such as cryptocurrency mining artificial intelligence to provide growth fuel for the long haul.

"We expect it to have a double-digit compound annual growth rate, in the next five years," Ho said according to a third-quarter earnings call transcript provided by Seeking Alpha. "We expect high-performance computing will become our major growth engine, starting in 2020."

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I reckon you can chalk TSMC's management up as bullish on the whole cryptocurrency trend. Bitcoin miners have certainly been good for the company's financial results so far.

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